Chevron: Rosebank Oil Project Is Uneconomic

Chevron Corp., the world’s second- largest non-state energy company by market value, said its Rosebank oil discovery off the coast of Scotland would be unprofitable to bring into production at this time.

Chevron plans to continue evaluating the 240 MMbbl field along with partners OMV AG and Dong Energy A/S for ways to improve the project’s potential returns, the San Ramon, California-based company said in an e-mailed statement Nov. 22. A final decision on whether to proceed will be made next year, according to the statement.

Rosebank’s unprofitability is a blow to UK and Norwegian efforts to halt the slide in North Sea oil output as fields first drilled in the 1970s and 1980s near the end of their productive lifespans. Dropping North Sea supplies are expected to drive a 15% decline in European crude and gas liquids production by 2018, the Organization of Petroleum Exporting Countries said in its annual world outlook on Nov. 7.

Rosebank “does not currently offer an economic value proposition that justifies proceeding with an investment of this magnitude,” Chevron said in the statement.

Chevron and its partners hired South Korea’s Hyundai Heavy Industries Co. Ltd. in April to construct a US $1.9 billion platform that could offload crude directly to tankers, Hyundai said in a Nov. 15 slide presentation. The vessel would have capacity to draw 100,000 bbl of oil and 190 MMscd/d of gas from the seafloor.

Chevron hasn’t disclosed any cost estimates for the total development. Rosebank is located 130 km (80 miles) northwest of the Shetland Islands and 1,130 m (3,700 ft) beneath the sea surface.

Chevron discovered Rosebank in 2004 and owns a 40% stake. OMV owns 50% and Dong holds a 10% interest.
ExxonMobil Corp. is the largest oil company by market value, according to data compiled by Bloomberg.